Feds: Energy suppliers mustjustify $55 million in chargesRegulatory commission could order refund for state

The Federal Energy Regulatory Commission order comes after FERC last week found 13 suppliers should pay as much as $69 million in refunds for January overcharges unless they can justify the prices.

The directives are part of an effort by the federal agency to address allegations that power wholesalers have earned windfall profits in the California market this winter by charging unreasonable prices.

The ISO earlier this month told FERC that private wholesalers and public utilities, such as municipals, should have to pay back roughly $550 million they overcharged in December and January for the last-minute power grid operators buy for utilities.

FERC, which regulates wholesale power sales, said it only has authority over the private wholesalers, not the $170 million in overcharges the ISO alleges came from public utilities. It plans to address December charges in a later order.

The commission said that for February, it will seek refunds whenever prices exceeded $430 per megawatt hour. It cited more than 11,000 transactions by the six companies that exceeded the threshold.

"We are telling these companies to tell us by March 23 why they went over that price, to justify it, and these costs will be subject to refund in a subsequent order," FERC spokeswoman Tamara Young-Allen said.

The Friday order involves only sales to the California Independent System Operator, which oversees the state grid.

The potential refunds identified last week involve wholesale power sales to the ISO and the now-defunct Power Exchange, which served as California's power marketplace under its ill-fated 1996 deregulation law.

The ISO is encouraged by FERC's willingness to order refunds but thinks the amounts are too low, said Steve Greenleaf, its director of regulatory policy.

"Based on the analysis we submitted to FERC on March 1 we do have reservations about FERC's methodology and appropriately think they need to look at more than Stage Three hours," Greenleaf said. "We think, quite honestly, it doesn't go far enough."

Grid officials said after last week's order that they want more money back, but considered the fact that FERC was contemplating refunds a victory of sorts, because of its rarity.

The commission's action comes as California lawmakers are starting a committee investigation into electricity costs to see whether wholesalers illegally manipulated the supply to drive up prices.

Power wholesalers vehemently deny any wrongdoing.

Associated Press Writer H. Josef Hebert in Washington contributed to this report.<